Big shot on campus

The boss of Harvard’s $35 bln fund recently made nearly three times as much as the head of Yale’s $25 bln pot despite much weaker returns. Colleges generally base compensation more on size than performance, as companies tend to do with CEOs. They should grade more carefully.

Context News

Harvard University paid the former chief executive officer of its endowment fund, Jane Mendillo, $13.8 million in total compensation in 2014, according to a report by recruitment consultancy Charles Skorina. The amount was more than double the $4.9 million that the second most generous university, Yale, paid longtime CIO David Swensen. Harvard’s endowment had an annualized return of 5.9 percent in the latest five-year period, which ended June 30, 2016, while Yale’s 10.4 percent return was the highest of more than 100 endowments surveyed by Skorina.

Because Mendillo left Harvard Management at the end of 2014 her compensation reflects 18 months of work, the university's investment arm said. That includes the fund’s fiscal year ended June 30, 2014 and the following six months.

The top quintile of university endowments by size paid their CIOs average compensation of $2 million in 2014, more than double the second quintile’s $797,000. The bottom fifth by size paid an average of $258,000.

The top fifth measured by performance, which had average annualized returns of 8.5 percent, paid compensation of $946,000 on average. That was slightly less than the $950,000 paid to the third quintile, which had average returns of 6.1 percent.